This is almost like a perfect buy sentiment signal - buy when existing holders are pessimistic, the results are positive, the outlook is positive and the share price is still low. I don't want to single you out as you're a great contributor but we've all been through the wash with the share price so we're all holding that baggage and the various biases that we have picked up.
But, what about the new investor that sees $2m NPAT, record basically everything, $5m cash and all for a $16m market cap / $11m EV. I think they would be extremely attracted to that with their only worry being, how do I buy volume without moving the share price.
I love this chart btw. I will provide some more detailed analysis on the numbers when I get a moment but it's all pretty positive!
Also updated desk note from PAC below. My bold emphasis at the bottom but it kind of sums it up nicely.
COMPANY
Beam Communications (BCC)
30 August 2023
MCAp / Share price
$18m
21c
RECOMMENDATION
Buy (higher risk) PT 35 c
News /EVENT
FY23 results – solid
KEY POINTS
·Solid resultsin terms of Sales, EBITDA and profit for FY23. The 4C and recent tradingupdates already outlined most of the news.
·At a headlinelevel, it is worth restating the extremely strong growth of this business:-
1.Sales up 67% to$40m.
2.EBITDA morethan doubled to $4.3m
3.NPAT of $2.1m(vs $177k pcp).
·Improvedcashflow from operations of +$2.4m vs +$326k previously.
·Cash of $4.9m –no debt.
·Zoleo royaltiesof $711k and growing (and we forecast it is very profitable). These royaltiesare now +$870k annualised as of 30 June 2023.
·Total recurringrevenue of $1.6m with further growth expected.
·The sales mixis forecast to change into FY24 – having seeded the market with Zoleo productsand Executive GO pipe fill sales – we expect group sales will moderateinto FY23, but margins will rise as the sales mix is richer, i.e. less, lowermargin Zoleo sales, more higher margin subscription.
·Theeffort/costs to bring the Executive Go (and other newly developed products) tomarket should be ameliorated and sales forecast to be strong – creating amargin uplift.
·EBITDA isexpected to grow further into FY24 (we have previosuly forecast $4.8m EBITDAfor FY24.
·W are unlikelyto materially change our FY24 forcasts in terms of EBITDA (+$4.8m). We haveforecast sales of $41.7m for FY24 and may review this on a modest level.
·The resultsplits up the major business units in good detail.
KEY DRIVERS
·PersonalSatellite communications as an industry and the value/convenience/function andportable device niches that Beam occupies are steadily growing in importanceand increased consumer demand.
·Beam has solidrevenue diversity and growth options within the various product families.
·Working capitalinvestment is normalised after the initial strong growth spurt disrupted supplychains normalise.
·Greater Zoleosales /activations in Europe and Australia- where Beam’s share of the JVsubscription revenue is higher.
·The Zoleo JVhas increasing value for both partners (Beam and Roadpost) as subscriptionsgrow.
·Further ordersof the Iridium (Beam) Executive Go product.
·Geographicexpansion of the Executive Go to new geographies such as Australia – nowselling via the SatPhone Shop.
·Ongoing demandfor the suite of established satellite products.
·Addition ofvalue-added applications to the Zoleo product. Capex (R&D) is expected toremain at c$3m as the business seeks to drive home the advantage of the growingproduct set. Capex is a relatively high expenditure given the overall businesssize but is set up around some specific projects for Iridium Beam brandeddevices.
·Greaterpenetration of Zoleo into the enterprise remote worker market with higher RPUand the ability to sell big packages of subscriptions.
INVESTMENT VIEW
·Risk /reward isvery favourable.
·Valuation on aperspective P/E of c 7- 8X FY24. EV of c $13m (c$18m - c$5m cash). Beam ischeap given our forecast EBITDA of $4.8m (FY24).
·There is valuein the JV – as outlined in the attached note.
·We were alreadyclose to Beam’s guidance for FY23 in terms of EBITDA, NPAT and a touch belowthe likely sales outcome.
·We will revisitour forecast shortly, particularly at the EBITDA level for FY24– don’t expectany major changes.
·Beam is a Buy.
